Money Lending

Here are some tips to approach a loaning situation between friends:

Always pay with Cash
Any wise man would never put oneself in a position of debt. Use cash instead of credit cards in order to control your spendings.

Think twice before you Lend
Any money you lend out, you are not investing. You most likely will not charge a friend interest and by the time you get your money back, the value of money might have dropped drastically.
Money is the root of all evil, especially when your money is in a friend's hands. You do not want to be whacking a friend that owes you.

Leverage your Bets
When you lend others money, you should have something as a guarantee. Something that is worth more than the cash you are lending out because if you need to sell it, you will never get back the entire sum.

Set the Terms
Be firm. It will be better if you get paid back in installments at least once a month so your friend recognizes that he has an obligation and not a free ride on your back.

Never lend more what you can afford
Keep costs as low as possible. Do not give away your life savings; there is still a risk to lending out money.

Don't be soft
When he does not repay or misses an installment, be firm. He owes you money, you better get it back.

Exhaust All Other Options
Before you accept money from a friend or offer money to a friend, make sure that there are not any other options you can pursue, like finding another money lending company that will work for your situation. The most important things to remember is that borrowing from friends should be your last resort, not your first. If you can get it from someone or somewhere else, then you should.

Treat it like the Business Arrangement
You must outline in writing the amount loaned, the duration for repayment, and the amount of interest that will be included in the repayment.

Be Wise in Your Spending After Borrowing Money from a Friend
Most friends do not mind lending the money and helping someone out, but it can be very infuriating to know that the money is being misspent.

Pay it Back!
No matter how long it takes, you need to pay the money back. If you have borrowed money from anyone, your first priority is to pay that money back. If it takes longer than what you expected, then it is important to talk to your friend and explain the situation. Most people will understand if there are good reasons for the delay.